ACA Software

What is the Affordable Care Act?

The Affordable Care Act (ACA), commonly known as Obamacare, is a landmark healthcare reform law enacted in the United States in March 2010. Its primary goals are to:

• Increase Access: Expand Medicaid eligibility and create health insurance marketplaces to make healthcare more accessible to a broader population.
• Improve Quality: Implement regulations and standards to enhance the quality of healthcare services and patient protection.
• Reduce Costs: Provide subsidies and incentives to lower health insurance costs and control healthcare spending.
• Protect Consumers: Prohibit insurance companies from denying coverage based on pre-existing conditions and enforce essential health benefit coverage.
• Individual Mandate: Require most individuals to maintain health insurance or pay a penalty, although the penalty for not having health insurance was effectively reduced to $0 at the federal level starting in 2019.

The ACA represents a significant shift in the U.S. healthcare system, aimed at making healthcare more affordable, accessible, and of higher quality for many Americans.

What form types are included in the Affordable Care Act?

The Affordable Care Act (ACA) involves various tax forms and reporting obligations. Some key forms include:

• Form 1095-A: Health Insurance Marketplace Statement, used by the Health Insurance Marketplace to report coverage information.
• Form 1095-B: Health Coverage, used by insurance providers to report coverage information to the IRS and to covered individuals.
• Form 1095-C: Employer-Provided Health Insurance Offer and Coverage, used by large employers to report offered coverage information.
• Form 1094-B: Transmittal of Health Coverage Information Returns, accompanying Form 1095-B.
• Form 1094-C: Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, accompanying Form 1095-C.
• Form 8962: Premium Tax Credit, used by individuals to reconcile advance payments of the premium tax credit.
• Form 8965: Health Coverage Exemptions, used by individuals to report health coverage exemptions (note: this form was used for tax years prior to 2019).

These forms are integral to the administration and enforcement of the ACA, serving to verify compliance with individual and employer mandates, and other provisions of the law.

What basic information is required to submit ACA Forms?

When filing ACA Forms, various general information is required, depending on the specific form and the reporting entity. Commonly required information includes:

• Identification Information: Name, Social Security Number (SSN), or Employer Identification Number (EIN) of the individual or entity.
• Health Coverage Details: Type of coverage, start and end dates, coverage provider, and amount of premiums (if applicable).
• Employer Information: For employer-related forms, details such as offer of coverage, employee share of the lowest-cost monthly premium, employer contact information, and full-time employee count.
• Employee Information: Names, SSNs, and coverage information for each full-time employee (if applicable).
• Dependent Information: Names and SSNs of dependents covered under the health plan (if applicable).
• Marketplace Information: Details about Marketplace coverage, including policy numbers and any advanced premium tax credits received (for Form 1095-A).
• Transmittal Information: Summary information required for transmittal forms (e.g., Form 1094-B or Form 1094-C) that accompany other ACA forms.

This information helps to verify compliance with the ACA's provisions, including the individual mandate, employer shared responsibility provisions, and eligibility for premium tax credits or other subsidies. Proper documentation and accuracy are essential when providing this information to the IRS and other relevant entities.

Employers can request an extension for filing ACA Forms such as 1094-C and 1095-C with the IRS. The process to request an extension is as follows:

1. Complete Form 8809: The employer must complete Form 8809, "Application for Extension of Time To File Information Returns," providing necessary information and the reason for the extension request.
2. Submit the Form: Form 8809 can be filed electronically or on paper, depending on the employer's preference and the number of forms being submitted. Electronic filing is encouraged by the IRS.
3. Automatic Extension: Generally, an automatic 30-day extension is granted if Form 8809 is filed before the due date of the ACA Forms. No signature or explanation is required for the automatic extension.
4. Additional Extension: In some cases, an additional 30-day extension may be requested, but this requires a detailed explanation and is not automatically granted.

It's important to note that an extension to file does not grant additional time to furnish statements to employees or covered individuals. Employers should be aware of the specific deadlines and comply with all relevant requirements to avoid potential penalties.

What types of penalties are there for ACA?

The ACA imposes two main types of penalties for non-compliance:

1. Individual Mandate Penalty: This penalty applied to individuals who did not maintain minimum essential coverage and did not qualify for an exemption. While the federal penalty was reduced to $0 starting in 2019, some states have implemented their own individual mandates with associated penalties.
2. Employer Shared Responsibility Penalty: Applicable Large Employers (ALEs) are subject to this penalty if they do not offer affordable, minimum essential coverage that provides minimum value to their full-time employees (and their dependents), and at least one full-time employee receives a premium tax credit for purchasing individual coverage through the Health Insurance Marketplace. This penalty is divided into two parts:
   • Section 4980H(a): Applies if the employer fails to offer coverage to at least 95% of its full-time employees (and their dependents).
   • Section 4980H(b): Applies if the employer offers coverage, but it's not affordable or does not provide minimum value, and at least one full-time employee receives a premium tax credit.

These penalties aim to encourage compliance with the ACA's provisions for individual health coverage and employer-provided health benefits. Penalties can be substantial, so understanding and adhering to the ACA's requirements is crucial for both individuals and employers.

What are the ACA codes to fill out C series forms?

Employers filling out ACA Forms 1095-C and 1094-C use specific codes to provide detailed information about the offer of coverage. Here are some common ACA codes used:

• Line 14 - Offer of Coverage Codes: These codes describe the coverage offered to employees.
  • Code 1A: Minimum essential coverage providing minimum value offered to full-time employee, and the cost of employee-only coverage does not exceed a specific percentage of the employee's household income.
  • Code 1B: Minimum essential coverage providing minimum value offered to the employee only.
  • Code 1C: Minimum essential coverage providing minimum value offered to the employee and dependents, not offered to spouse.
  • Code 1D: Minimum essential coverage providing minimum value offered to the employee and spouse, not offered to dependents.
  • Code 1E: Minimum essential coverage providing minimum value offered to the employee, spouse, and dependents.
  • Code 1F: Minimum essential coverage NOT providing minimum value offered to the employee, or the employee and spouse or dependents, or the employee, spouse, and dependents.
  • Code 1G: Offer of coverage to an individual who was not a full-time employee for any month of the calendar year and who enrolled in self-insured coverage for one or more months of the calendar year.
  • Code 1H: No offer of coverage (employee not offered any health coverage or offered coverage that is not minimum essential coverage).
  • Code 1I: Qualified Offer made to the employee, and coverage offered to spouse and dependents (code is not used after 2015).
  • Code 1J: Minimum essential coverage providing minimum value offered to the employee and at least minimum essential coverage conditionally offered to the spouse, no offer to dependents.
  • Code 1K: Minimum essential coverage providing minimum value offered to the employee, at least minimum essential coverage offered conditionally to the spouse, and minimum essential coverage offered to dependents.
  • Code 1L: Affordability determined by using EE’s primary residence location ZIP code.
  • Code 1M: Affordability determined by using EE’s primary residence location ZIP code.
  • Code 1N: Affordability determined by using EE’s primary residence location ZIP code.
  • Code 1O: Using the EE’s primary employment site ZIP code affordability safe harbor.
  • Code 1P: Using the EE’s primary employment site ZIP code affordability safe harbor.
  • Code 1Q: Using the EE’s primary employment site ZIP code affordability safe harbor.
  • Code 1R: NOT affordable offered to EE; EE and spouse, and/or dependents.
  • Code 1S: Offered to an individual who was not an full time EE.
  • Code 1T: Affordability determined using EE's primary residence location ZIP code.
  • Code 1U: Using EE's primary employment site ZIP code affordability safe harbor.
• Line 16 - Safe Harbor Codes and Other Relief: These codes describe reasons the employer is not liable for a penalty or other relief for an employee.
  • Code 2A: Employee not employed during the month.
  • Code 2B: Employee not a full-time employee.
  • Code 2C: Employee enrolled in coverage offered.
  • Code 2D: Employee in a section 4980H(b) Limited Non-Assessment Period.
  • Code 2E: Multiemployer interim rule relief.
  • Code 2F: Section 4980H affordability Form W-2 safe harbor.
  • Code 2G: Section 4980H affordability federal poverty line safe harbor.
  • Code 2H: Section 4980H affordability rate of pay safe harbor.
  • Code 2I: Non-calendar year transition relief (not used after 2015).

Understanding and using the correct codes is essential for accurately completing ACA Forms 1095-C and 1094-C. Employers should refer to official IRS instructions for a complete list of ACA codes and their meanings.